Month: February 2012

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock, presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

By Paul Tracy, DividendOpportunities.com

Let’s be honest. When you hear about a stock that yields 12% or more, your first thought should be that the company is probably a basket case that can’t even turn a profit. If it’s offering a yield that sounds too good to be true, it probably is.

And you’d be right most of the time. Usually, yields are this high because a company’s share price is falling — signaling underlying problems in its business. A lower share price gives a higher dividend yield. That means profitable companies paying yields this high should be rare.

In fact, my staff and I recently ran the numbers. When we looked only at the companies that turned a profit over the past year, we found just 17 U.S. common stocks paying yields of more than 12%. Here, you can see them for yourself:

But did you know there are actually hundreds of 12%-plus yields out there from profitable companies? The difference is that many investors just don’t know where to find them.

That’s because the majority of the world’s highest yields aren’t being paid by U.S. companies. My recent search found 210 additional stocks out there yielding 12% or more… all coming from international-based companies.

That means many income investors are essentially missing out on 92% of the highest yields before they even get started.

I’ve researched this topic for years. And the fact is, foreign companies are simply paying higher yields across the board.

Take a look at the table to the right.

You can see the difference between what we get from U.S. companies and what’s available from international companies. Keep in mind that I only looked at the common stocks of companies that were profitable over the past year.

As Judy Sarayan, a fund manager at mega-investment firm Eaton Vance explained, “There’s a much stronger dividend culture abroad… individual investors play a larger role in those markets, and they have always demanded more dividends.”

On a macro scale, the difference is striking. While the average yield for all stocks in the S&P 500 is just 2.0%, Germany’s average yield is 3.6%… Brazil’s average yield is 3.6%… the United Kingdom yields the same… Australia yields 4.7%… New Zealand pays 4.8%.

But where you really start to see a dramatic difference is when you look at some individual examples of higher yields abroad.

Take banks, for instance. Here at home, Bank of America (NYSE: BAC) used to pay investors $2.56 per share before the financial crisis. That represented a yield of more than 6.0%.

Of course, we all know what happened next. Today, BAC pays a laughable $0.01 (yes, one penny) each quarter.

But it’s a completely different story outside the United States.

Santiago, Chile-based Corpbanca SA (NYSE: BCA) is a perfect example.

Chile’s largest bank, Corpbanca offers commercial and retail banking through more than 100 offices. The bank also offers mutual fund management, insurance, and securities brokerages through a network of subsidiaries. Not only have the shares soared over the past five years, but dividends now total $1.66 per share each year. That gives the stock a yield of over 7.0% at recent prices, and you can buy it on the New York Stock Exchange.

It’s the same thing for utilities. They are one of the best places to search for yields in the U.S. Duke Energy (NYSE: DUK) pays a yield of about 4.5%. But even that is topped by international utility stocks like Germany’s E.ON AG (OTC: EONGY).

E.ON AG is the world’s largest energy provider. It serves over 26 million customers and employs more than 75,000 people. Its shares pay investors $2.16 a year, for a yield of 10%… that’s about twice as much income as the average utility here in the U.S.

Still, most U.S. investors are simply unaware that they’re missing out on high yields like these.

I want to make something clear, though. I don’t think you should drop everything and put every dollar you have into international high-yielders. Truth is, the size and scope of the U.S. market makes it a great place to search for income investments.

But limiting yourself to only U.S. stocks is like going to a restaurant and limiting your options to just one side of the menu. Sure you can find something you like… but wouldn’t you rather see all the options?

And one more thing — not every one of the 210 stocks is available stateside, but don’t worry, you can buy many of these without even leaving the U.S. markets.

I have more details — including several names and ticker symbols — in a presentation I recently put together. You can visit this link to read it now.

All the best,

Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — High-Yield International

P.S. — Remember, you can learn more about investing in high-yielding international stocks — including several names and ticker symbols — by reading this presentation.

Disclosure:  Neither Paul Tracy nor StreetAuthority own shares of the securities mentioned in this article. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.

By TraderVox.com

The problems for Euro are far from getting addressed. The meeting of Euro zone officials turned out to be nightmare for the bloc currency. Euro zone leaders are mulling over the complete or partial delay of the bailout package to the Greece till the elections in April. The pair is printing fresh low of 1.3062. It is a one week low. The support on the downside may be seen at 1.3020 and 1.2980. The resistance may be seen at 1.3110 and above at 1.3190. The slide in Euro has also seen in other Euro crosses. EUR/JPY has fallen below 103 levels.

The sterling pound also felt the heat of possible delay of Greek deal. It again went below 1.5700 levels and printed a fresh low of 1.5670. It is currently trading around 1.5685, virtually flat for the day. The support may be seen at 1.5660 and 1.5600. The resistance may be seen at 1.5700 and above at 1.5730.

Yen gained against the US dollar during the US session to form a low of 78.19. It has come off the lows and is trading around 78.32, down about 0.10%. The support may be seen at 78.20 and below at 78. The resistance may be seen at 78.40 and above at 78.70.

Following the correlation, US dollar gained against the Swiss frank following the Greek delay. It has come above the 0.9200 and printed a high of 0.9239. The pair is trading near the high around 0.9225, up about 0.30%. The resistance may be seen at 0.9250 and 0.9300. The support may be seen at 0.9200 and below at 0.9150.

Australian dollar has retracted the gain of the day and is currently trading around 1.0728, up about 0.35% for the day. The support may be seen 1.0700. The resistance may be seen at 1.0750.

The dollar index has rocketed above 79.50 and is currently trading around 79.66 near the high of 79.72. The euphoria of the Chinese help to Europe was clearly overshadowed by the possible delay in Greek deal. A bridge loan has to be facilitated to Greece to avoid the default in March.

Article provided TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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It was difficult to make a buck in 2011. Those who had a job thanked their lucky stars.

And if you had some capital to invest, trying to turn a profit was just brutal. The Dow was up 5.5% for the year, but it sure didn’t feel like it. The S&P 500 finished almost exactly where it ended 2010. In fact, it was just 0.04 points away from the final 2010 number. The Nasdaq was down 1.8%.

Gold gained 10%, but went through some wild swings, punishing investors who jumped on the bandwagon.

And if you wanted to simply sit back and collect interest, good luck. Money markets, CDs and savings accounts yielded next to nothing. Treasuries weren’t much better.

So it’s no surprise that investors started to rediscover dividend-paying stocks as the one place they could make a few dollars.

I expect that trend to continue in a big way this year. In fact, in December, I made several predictions for 2012. Among them, MLPs (master limited partnerships) would become trendy.

The more I think about it, the more I’m convinced this class of stocks will not only be trendy, but become white hot to the point where pundits will be using the “B” word – “bubble.”

Several factors will lead to the “bubblicious” gains in these stocks, which are usually energy related.

1. Investors’ desperate search for income – Dividend stocks were all the rage in 2011 as investors tried to get yield anywhere they could find it. MLPs typically have yields above 5% since they must distribute all of their income back to unit-holders in order to avoid corporate taxes. The result is a yield that’s greater than the typical dividend-paying stock.

2. Energy experts Dave Fessler and Matt Carr expect energy prices to rise in 2012 – For some MLPs, the price of oil and gas doesn’t matter as they simply transport the stuff from point A to point B. For others it does, and higher prices mean higher profits and higher payouts to unit-holders.

3. Tax deferred strategy – Most, if not all, of MLPs’ distributions are usually not taxed by the IRS as ordinary dividends. Instead, they’re treated as a return of capital. This lowers your cost basis, which could increase your capital gains when you sell the stock. But while you’re collecting the cash distribution, you won’t be taxed on the distribution in the year you receive it. That can be attractive, particularly those in higher tax brackets.

4. Media frenzy – For all of the above reasons, I expect MLPs to get hot in 2012. The media will surely notice. Soon, you’ll see MLPs being talked about in the mainstream financial press, which will lead to more interest by investors, which will cause the stocks to go higher, which will generate more media attention.

I think the sector will get so hot, you’ll first see the naysayers come out, and then the believers forcefully defend their beloved MLPs. At some point the sector will drop and the bears will say, “I told you so.”

But their satisfaction will only last until the face-ripping rally that will come next as investors jump in on the newly created buying opportunity. The stragglers will keep the rally going, as they don’t want to be left out of the next great thing.

All of this attention will lead to utterances of the “B” word by the end of the year.

But a bubble isn’t always a bad thing – if you’re in early enough and get out when things get frothy.

If you’re interested in MLPs, take a look at companies like Williams Partners (NYSE: WPZ), Enbridge Energy (NYSE: EEP) and Buckeye Partners (NYSE: BPL)

I’m very bullish on MLPs right now. With those higher than average yields, if 2012 is a repeat of last year, MLPs might be one of the few places to make some real money this year.

Good Investing,

Marc Lichtenfeld

Article by Investment U

By TraderVox.com

For the first time in four days, euro showed some gains against the dollar after China promised to give help to solve the debt crisis. This has eased the pressure on the currency as the debt crisis continues with Greece seeking to secure a second bailout. The 17-nation currency rose to its highest level against the yen; to a level it had reached two months ago.

A report showing that the gross domestic product for the European nations was not as low as it had been estimated by many analysts. Another currency that rose tremendously against the yen is the New Zealand dollar which rose to a six month high after the nation’s retail sales increased for the fourth quarter.

The weakening of the yen against major currencies is also as a result of the government’s intervention to weaken the currency. The euro had some good news from China when news emerged that the country would be offering help to ease the debt crisis in the region. The Governor of the People’s Bank of China Zbhou Xiaochuan said that the nation is going to invest in Europe’s bailout funds.

Further, the country indicated intentions of sustaining its holdings of euro asset which came as a relief for the eurozone. China has the largest foreign-exchange reserves totaling to $3.18 trillion. In his statement, the Governor indicated that the country was looking to diversify its foreign holdings from US dollar dominated holdings. These comments by the governor have prompted the increasing bid for the risk assets which has seen the euro gain considerably.

According to the European Union’s statistics, the GDP of the 17 nation region fell by only 0.3 percent against an estimate of 0.4 percent. Moreover, the region’s second largest economy, France, grew by 0.2 percent which was also unexpected. These unexpected results have also added to the 17-nations currency increased performance against the major currencies in the world. However, the failure to hold a meeting in Brussels by the regions finance ministers is a bad sign for the successful conclusion of the Greece crisis. These sentiments were echoed by the Italian Prime Minister Mario Monti.

Article provided TraderVox.com
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There are many aspects to the housing market that the average American investor is unaware of.

Lately there have been articles, such as the recent ProPublica and NPR piece, “Freddie Mac Bets Against American Homeowners,” that with the proper due diligence would not have been news.

But to understand this fully, a few subjects must be covered. Let’s begin with one of the main cogs of the housing market since 1970.

Definition of Securitization

The process of securitization is a very intricate and delicate system that involves a number of steps and individuals. The first step occurs when a borrower obtains a loan from a lender. These loans can consist of any consumer contract that produces a cash flow through the collection of principal and interest payments, for example mortgages, student loans, car loans and even credit cards.

The lender or originator of the loan then sells the loan to an issuer, and when the borrower begins making monthly payments on their loan, the money is processed through a servicer to the issuer. A number of these loans are pooled together by loan type and risk, and structured into a marketable debt security.

The debt securities can take the form of bonds, pass-through securities or collateralized mortgage obligations. The process of securitization allows illiquid assets, whose value is uncertain and not easily quickly converted into money, to be pooled together and sold to investors. The investors are paid by the principal and interest payments generated by the assets in the pool. Therefore, the assets are characterized as secured because they’re collateralized by the asset.

Securitization Created the Modern-Day Mortgage System

Before securitization, banks had to hold loans until they matured or were paid off. By combining mortgages into one large pool, the issuer can divide the large pool into smaller pieces based on each individual mortgage’s inherent risk of default and then sell those smaller pieces to investors.

The process creates liquidity by letting smaller investors purchase shares in a larger asset pool. Without the securitization of mortgages, retail investors would not be able to afford to buy into a large pool of mortgages.

Securitization, therefore, has been recognized as a successful financial mechanism that allowed investors to allocate capital more efficiently, to access diverse and cost effective funding sources, and better manage business risks. If managed correctly, securitization is a financial process that can help businesses and investors see a return on investments while showing very little risk on their balance sheet.

Rather than holding whole loans on a balance sheet, companies were encouraged to hold securitized assets such as mortgage-backed securities.

As previously noted, the securitization process began over 40 years ago and was used to pool together a wide array of assets.

For the historical success that securitization enjoyed in the market place, why was it at the center of the current financial crisis?

When taking an in-depth look, the securitization process itself wasn’t the problem. Instead, it was the influx of bad assets into the private mortgage backed securities market.

So stay tuned, as my next article will tackle how securitization factored into the housing bubble and subsequent “Great Recession.”

Good Investing,

Jason Jenkins

Article by Investment U

In focus this week: the big fertilizer question, Potash or Mosaic; AAPL could trounce Samsung; gas pressure on coal; and the SITFA.

If you follow my IU articles, you know I am huge fan of AAPL and am looking for $600 on the stock. I called for $600 when the stock was at $380.

A recent Journal article has just added fuel to the $600 fire

Samsung and AAPL have turned the smartphone market into a two-horse race. The Journal called it a Sea Biscuit and War Admiral match-up.

Right now they are neck and neck. This past quarter AAPL sold 23.9 millions phones and Samsung sold 23.5 million.

Samsung has an edge with a global distribution network second only to Nokia and they both have low-end and high-end phones. In fact, Samsung has a greater variety of phones that AAPL does not

But hold on! AAPL was able to beat Samsung in sales with no low-end phone at all. If, as the Journal suggested, AAPL were to introduce a low-end model, they could conceivably blow away Samsung.

As I have said before, AAPL has done the best sales job I have ever seen. Add that to their branding, technology and retail operation and you have a real juggernaut.

AAPL at $600, you heard it here first!

Gas Pressure on Coal

The incredibly low natural gas prices we have seen, the result of the huge amounts of shale gas production, are putting pressure on coal miners.

Gas powered electrical generation, as you would assume, has increased as gas prices have dropped. In the last 12 months, 24% of electricity came from gas and 42% from coal.

That’s up from 18% for gas and almost 50% from coal in just the last decade. In just the last three years, gas use has jumped almost 3% and coal has dropped about 6%.

Some big coal producers, Alpha Natural Resources for one, have announced cut backs to cope with the shift to gas-powered electricity.

Thirty-nine percent of all electrical generating plants in the U.S. are gas fired, while only 31% use coal. But, the coal plants had been used much more than gas. That’s changing.

While coal still has a big export market, their biggest customer is the EU, which isn’t setting anything on fire right now.

Central Appalachian coal prices have dropped 15.4% this year alone, following gas prices almost exactly.

The Journal called it a race to the bottom.

But the real unknown here, or maybe it isn’t too unknown, is the effect new regulations for cleaner burning electrical plants will have on coal use. Many coal plants have to be shut down completely to meet the new regs.

Coal doesn’t look like it has too many breaks coming and it could be bad news for coal miners.

Fertilizer

Most investors don’t realize that farmers worldwide have no choice but to use potash as a fertilizer. They can skip a year or two, but any longer than that and their production can drop by as much as 30%.

That’s how dependent food production is on potash. Add to that the fact that the world is consuming about 10% more food every year than it produces, and farmers will have to produce as much food in the next 10 years as they in the past 50, and the case for potash fertilizer come into sharper focus.

The two big players are Mosaic, MOS, and Potash of Saskatchewan, POT. POT just happens to have the same name as the fertilizer itself.

At first glance, MOS seems to have the nod as the best play, but a recent Seeking Alpha article says POT is the big winner here.

POT is expected to grow 78.4% in 2011 and another 13.5% next year.

A very conservative estimate puts this stock at about $55 from its current price of $46.

Mosaic, on the other hand, has some very good numbers, but not quite as lofty as POT. MOS is expected to grow by about 11.2% this year and 8.9% next.

Despite very tough times for the past three years, POT has managed to post some amazing numbers, but not so amazing when you consider that their customers have no choice but to use their product.

POT has a larger market share, is safer, less volatile and has a higher dividend than any of its competitors. It is the obvious choice.

SITFA

Finally, the SITFA award goes to a bunch of bureaucrats in India who were sitting on a license that a local snake charmer had applied for.

It seems the snake charmer wanted a small piece of land for his snakes, and according to him, the local government bureaucrats were waiting for a bribe before they would approve it.

So, the snake charmer pulled his only trump card and dumped a bag of poisonous snakes, cobras included, into the office of the of the local paper pushers.

To say all hell broke loose would an understatement. According to the news report, snakes started climbing on desks and chairs and hundreds of people ran for their lives.

My parents always advised me not to get in any spitting contests with snakes. I guess that includes snake charmers, as well.

But at least we know one way to get bureaucrats off their duffs.

There has been no sign of the snake charmer since he dropped off his bag of snakes.

Article by Investment U

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 15 February 2012, 09:00 EST

SPOT MARKET gold prices rose to $1732 per ounce Wednesday lunchtime in London, slightly above where they started the week, as European stock markets dipped amid ongoing uncertainty over Greece’s second bailout.

Silver prices tested $34 per ounce – 1% above last Friday’s close.

“Critical support [for gold prices] is in the $1706 area and we would be bearish if this level fails to hold,” says the latest technical analysis from bullion bank Scotia Mocatta.

“Resistance is last week’s high around $1752.”

Euro gold prices meantime jumped to €42,528 per kilo (€1322 per ounce), as the Euro fell sharply against the Dollar Wednesday lunchtime, after German finance minister Wolfgang Schaeuble expressed concern over whether Greece can be given its second bailout.

“I have doubts that all conditions have been fulfilled,” Schaeuble told a German radio station. Schaeuble has also revealed that European policymakers are still awaiting a debt sustainability report on Greece, according to The Telegraph.

Eurozone finance ministers postponed a meeting scheduled for today, at which it was hoped they might sign off the bailout. Jean-Claude Juncker, chairman of the Eurogroup of single currency finance ministers, says more work is needed for Greece to meet a requirement to find €325 million of additional deficit cuts.

“Furthermore,” added Juncker on Tuesday, “I did not yet receive the required political assurances from the leaders of the Greek coalition parties on the implementation of the program.”

Antonis Samaras, leader of Greece’s New Democracy party and widely tipped to be next prime minister, has suggested he could seek to renegotiate any deal if he is elected in April’s elections.

Before then, Greek government bonds worth €14.5 billion mature on March 20. Greece will not be able to meet these repayments unless European leaders sign off the €130 billion rescue package.

A Greek default would have “devastating consequences”, according to European Commissioner on Economic and Monetary Affairs Olli Rehn – who yesterday also told Spain’s government it needs to be specific about its deficit-cutting measures.

The Eurozone however is “better prepared than two years ago” for a Greek default, Schaeuble said at the start of this week.

“We are getting closer to default,” a senior Eurozone official tells the Financial Times.
“Germany, Finland and the Netherlands are losing patience.”

Greece’s economy shrank 7% year-on-year to the fourth quarter of 2011, official government data published Tuesday show. French bank BNP Paribas meantime has written down the net present value of its Greek debt holdings by 75%, according to Q4 2011 results published today.

The fall in the Euro reversed gains made during Wednesday’s Asian session, following comments from Chinese premier Wen Jiabao.

“China is ready to get more deeply involved in participating in solving the European debt issue,” Wen told a joint press conference held in Beijing with Herman van Rompuy, president of the European Council.

The Eurozone economy as a whole shrank by 0.3% in Q4 on a seasonally adjusted basis, according to figures from Eurostat this morning.

“In the long run, the Eurozone debt crisis is still supportive of gold,” says Hou Xinqiang, analyst at Jinrui Futures in Shenzhen, China.

Here in the UK, the economy is “moving in the right direction”, according to Bank of England governor Mervyn King’s opening remarks at today’s Inflation Report press conference.

Britain’s unemployment rate meantime remains at 8.4%, according to data released by the Office for National Statistics on Wednesday.

“Moving to a world of steady growth, inflation close to our 2% target, and a more normal level of interest rates, will take time,” King warned this morning.

Responding to suggestions that quantitative easing isn’t working – and that the Bank is targeting the wrong assets by buying UK government Gilts – King defended the policy, saying that buying any assets for which there is no demand would be “the definition of a subsidy”.

The Bank of England expanded its quantitative easing program from £275 to £325 earlier this month. The Bank of Japan meantime, which first adopted QE over a decade ago, announced yesterday that it too was increasing the size of its asset purchase program.

Iran’s Oil Ministry meantime has denied a report made by Tehran-based English language broadcaster Press TV that it has shut off oil exports to France, Portugal, Italy, Greece, the Netherlands and Spain. The European Union last month joined the US in imposing sanctions on Iran.

Over in New York, hedge fund Paulson & Co. cut its stake in world’s largest gold ETF the SPDR Gold Trust (ticker GLD) by 15% in Q4 2011, according to SEC filings. In the same period, Soros Fund management boosted its holdings of GLD shares by 77%. The overall volume of gold bullion held to back GLD shares rose nearly 2% in Q4.

The Shanghai Futures Exchange has announced it will lower its gold trading margins with effect from March 1.

“The exchange’s move is aimed at boosting trading at a time when volatility seems to have been tamed,” says Zuo Xichao at research firm Beijing Antaike Information Development.

“Lower margin requirements will make these investments easier and more attractive because trading now requires less money to be locked up.”

Daily volatility in gold prices has halved since hitting its highest level in three years last September.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Source: ForexYard

The USD has steadily moved out ahead of the Japanese yen this afternoon. The USD/JPY has hit a 3 1/2 month high and experienced flat trading at 78.49. This can be attributed to a number of factors, including recent announcements from the Bank of Japan. The BoJ recently implemented monetary easing steps which analysts have suggested may have contributed the stop-loss buying of the USD.

Also affecting the earlier rise in the USD is the ongoing economic recovery in the United States.  Figures from the U.S. continue to support the fact that the recovery is slowly but surely taking hold. Japanese trade deficit may very well be an influential factor as well. As the day continues, traders will have to monitor how these factors continue to influence the strength of the USD or, conversely, the weakness of the yen.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Feb. 15 (Bloomberg) — Mitul Kotecha, Credit Agricole’s Hong Kong-based head of global currency strategy, talks about the yen. Kotecha also discusses Europe’s sovereign debt crisis and its implications for the euro and China’s yuan. He speaks with Susan Li, Rishaad Salamat, Mia Saini, and David Ingles on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)